While Wall Street's solid rise Monday provided a positive early cue, with the Dow Jones Industrial Average surging 1.4% to its highest close since May 13, Asian investors were more circumspect as they awaited the outcome of the Federal Open Market Committee meeting.

"Before investing in exporters, investors want to see the outcome of the U.S. FOMC meeting as it may have an impact on foreign exchange rates," said Kenichi Hirano, strategist at Tachibana Securities in Tokyo.

Japan's Nikkei Share Average was up 0.4% as local markets resumed trading after Monday's public holiday. Australia's S&P/ASX 200 was down 0.1%, turning negative after rising as much as 0.6% earlier in the day. The Shanghai Composite Index was down 0.2%, giving up earlier gains while Hong Kong's Hang Seng Index was trading flat, off earlier highs above the key 22,000 mark. Markets in Seoul were closed for a public holiday.

DJIA futures were down eleven points in screen trade.

The Tokyo market pared morning highs, reflecting the general caution ahead of the results of the FOMC meeting.

Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets, said investors were also wary on China-related stocks amid rising tension between Japan and China as Beijing on Sunday suspended high-level contacts after Tokyo extended the detention of a Chinese boat captain accused of intentionally ramming his trawler into two Japanese patrol vessels.

Automakers, which have exposure to China, were struggling. Nissan Motor rose a modest 0.4% despite announcing plans to nearly double its annual capacity of vehicle production in China by 2012. Honda Motor was down 0.5% and Toyota Motor lost 0.3%.

Commodity shares and trading houses were higher after gold futures set a new record high on Monday and crude oil futures rose; Mitsubishi Corp rose 1.0% and Inpex added 2.1%. Mitsui & Co was up 1.8%.

Canon advanced 2.6% after the Nikkei reported the company will likely post about Y90 billion in operating profit for the July-September period, up 50% on-year.

Gains in the Sydney market faded, with the benchmark turning negative, despite an upbeat assessment of the Australian economy in the minutes of the Reserve Bank of Australia's Sept. 7 policy meeting.

The minutes showed the RBA is on track to raise interest rates soon, with the central bank saying that if its current central scenario for the economy eventuates, the monetary policy brakes will need to be tapped again.

"It's been a little bit weaker than we thought today," said IG Markets strategist Ben Potter. "Obviously a lot of U.S. traders would have bought the break above the top of the range on Wall Street. But the breakout wasn't confirmed by increased volume. You could easily get a pullback if U.S. housing starts are particularly weak or the FOMC says something the market doesn't want to hear."

Blue chip Hutchison Whampoa was down 0.5%, taking a breather after its two-day 7.2% rally. Sun Hung Kai Properties was up 0.7% after it said late Monday its net profit for the year ended June 30 nearly tripled to HK$28.04 billion.

Shares in China were slightly lower after an early rise, as most investors retreated to the sidelines ahead of the three-day break for the Mid-Autumn Festival starting Wednesday. China Construction Bank gained 0.2%.

Trading in ICBC shares was suspended for a shareholder meeting to discuss the plans of the bank's two largest shareholders, China's Ministry of Finance and Central Huijin Investment Ltd., an investment arm of the nation's sovereign wealth fund, to subscribe to the lender's planned rights issue.

ICBC, China's largest bank by assets, Monday said the shareholders plan to subscribe to all of the offered rights shares in cash.

Elsewhere in the region, Taiwan's Taiex was 0.2% higher, Singapore's Straits Times Index was up 0.3%, Malaysia's Kuala Lumpur Composite Index gained 0.2%. Indonesia shares were flat, India's Sensex was up 0.5%, New Zealand's NZX-50 was up 0.8% and Philippine shares were 1.1% higher.

In foreign exchange markets, the U.S. dollar was trading in tight ranges against the euro and the yen as investors remained cautious ahead of the outcome of the Fed meeting. The euro was fetching $1.3090 against the dollar, from $1.3061 late Monday in New York, and was at Y111.96 against the yen, from Y112.02. The dollar was buying Y85.60 compared with Y85.75.

"We suspect it will take further clear deterioration in U.S. economic data for the Fed to consider additional quantitative easing measures," said Mike Jones, currency strategist at the Bank of New Zealand. "As such, there is unlikely to be much change in the Fed's language. If we're right, a mild bounce in U.S. bond yields and the U.S. dollar could be in the offing," he said.

Lead December Japanese government bond futures were up 0.22 at 142.34 points, buoyed by further strength in U.S. Treasurys Monday. The 10-year cash JGB yield was down 2.0 basis points at 1.050%.

Spot gold was at $1,278.70 per troy ounce, up 20 cents from Monday's New York close. October Nymex crude oil futures were down 58 cents at $74.28 per barrel on Globex.

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